George Soros criticized the role of Germany in the Euro Zone crisis and said that the single currency possibilities will become stronger if the most powerful members leave. Soros, while making a speech in Frankfurt, Germany said that the country has probably gotten into recession due to its excessive role in the Cyprus deal.
Germany should opt to quit the euro or stop opposing the much discussed Eurobonds, tells Soros. Eurobonds are the kind of sovereign debt, which ensures that the borrowing made by every member country is guaranteed by all other members.
“My first preference is Eurobonds; my second is Germany leaving the euro,” he said in his lecture, entitled: How to save the Union from the euro crisis.
The billionaire speculator, further said that Germany is free to decide its will on authorizing or not authorizing the Eurobond. However, he also said that Germany does not hold the right to stop the countries who are dealing with heavy debts to save themselves. Germany should quit the Euro and allow others to introduce them if it cannot provide authority for the same.
Soros pointed Germany Chancellor Angela Merkel in his speech and said that Germany should decide on an alternative course before things get worse. The excessive involvement of Germany in Cyprus deal, according to Soros, was politically a winning situation for Merkel so much that no country can go against her will.
Soros went on to say that the Euro zone depression is hardly affecting Germany, but it will envelop the country by the time of elections. The reason he gave was that the monetary policy followed by Germany was not in terms with other currencies that are engaged in quantitative easing.
According to Soros, if Germany will quit then Euro will decline, which would be good for the indebted countries that can over come their debts in a real sense and there would be no possibility of default once Eurobond is issued. Quitting of Germany will help Europe to overcome depression.
Soros in an interview earlier, discussed Japan’s financial plight and the new policy of the Bank of Japan regarding inflation.
He said “If the Japanese Yen starts to fall in value and the people of Japan lose faith and don’t want to invest their money in the Yen, they may put their money abroad, which could cause the Yen’s fall to become an avalanche”. He also said that the mistakes repeated by Europe have been once made by Japan 20-25 years ago.
He marked the similarity between Japan’s and Europe’s steps to curb recession and said that the austerity drive by Europe will lead them into the same situations Japan was in and now trying to get out of after many years.
A report from Bank of America (BAML) in February, which discusses hedge fund positioning, revealed that Hedge funds continue to short the Japanese Yen and more since the Prime Minister announced his intention to weaken the currency.